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BB settles for independent directors to banks PDF Print E-mail
Sunday, 25 May 2008

Bangladesh Bank has accepted a request by private commercial bank owners to choose independent directors to their boards instead of appointing directors from among their depositors.

"But the banks will have to comply with certain rules and regulations that the central bank will set to appoint independent directors," central bank governor Salehuddin Ahmed told Saturday.

"The banks will not be allowed to appoint directors at will. They have to appoint people who will play a role to protect the interests of depositors."

Bangladesh Bank will prepare guidelines and a set of rules on the matter soon, Salehuddin said.

"The directors must have experience in banking and have made contributions in the economic activities of the country," he said.

Salehuddin referred to the appointment of Zaidi Sattar, a former economist for World Bank's Dhaka office, as an independent director to Southeast Bank.

"If all banks appoint efficient people like him, it will be easier for them to carry out their operations. Depositors' interests will be protected too."

The governor said the central bank had initially taken the initiative on appointment of directors from among depositors in an effort to protect their interests. But the bank has reconsidered the initiative and agreed with the bank owners on independent directors.

Bangladesh Bank had earlier issued a circular asking all private banks to appoint two directors from among its depositors.

The Bangladesh Association of Banks (BAB), an organisation of private bank owners, strongly objected to the decision.

The association leaders, after meeting with finance adviser AB Mirza Azizul Islam, submitted a proposal to Bangladesh Bank on appointing independent directors.

Nazrul Islam Majumder, chairman of Exim Bank and head of BAB, said the central bank had eventually responded to their request to appoint two independent directors instead of depositor directors.

Salehuddin said the central bank would monitor closely the banks' compliance with the rules on appointment of independent directors.

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